Mechanisms for a spatially distributed market

Moshe Babaioff; Noam Nisan; Elan Pavlov

doi:10.1145/988772.988776

Mechanisms for a spatially distributed market

Moshe Babaioff^*, Noam Nisan, Elan Pavlov

^*Corresponding author for this work

The Rachel and Selim Benin School of Engineering and Computer Science

Research output: Contribution to conference › Paper › peer-review

18 Scopus citations

Abstract

We consider the problem of a spatially distributed market with strategic agents. In this problem a single good is traded in a set of independent markets, where shipment between markets is possible but incurs a cost. The problem has previously been studied in the non-strategic case, in which it can be analyzed and solved as a min-cost-flow problem. We consider the case where buyers and sellers are strategic. Our first result gives a double characterization of the VCG prices, first as distances in a certain residue graph and second as the minimal (for buyers) and maximal (for sellers) equilibrium prices. This provides a computationally efficient, individually rational and incentive compatible welfare maximizing mechanism. This mechanism is, necessarily, not budget balanced and we provide also a budget-balanced mechanism (which is also computationally efficient, incentive compatible, and individually rational) that achieves high welfare. Some of our results extend to the cases where buyers and sellers have arbitrary convex demand and supply functions and to the case where transportation is controlled by strategic agents as well.

Original language	English
Pages	9-20
Number of pages	12
DOIs	https://doi.org/10.1145/988772.988776
State	Published - 2004
Event	Proceedings of the 5th ACM Conference on Electronic Commerce,EC'04 - New York, NY, United States Duration: 17 May 2004 → 20 May 2004

Conference

Conference	Proceedings of the 5th ACM Conference on Electronic Commerce,EC'04
Country/Territory	United States
City	New York, NY
Period	17/05/04 → 20/05/04

Bibliographical note

Funding Information:
The authors would like to thank the editor and the anonymous referees for their very helpful comments. This research was conducted when the first two authors were students at the School of Engineering and Computer Science, The Hebrew University, Jerusalem, Israel. It was supported by grants from the Israeli Ministry of Science, the Israeli Academy of Sciences and the USA–Israel Bi-national Science Foundation. The first author (Babaioff) was also supported by Yeshaya Horowitz Association and by a National Science Foundation grant number ANI-0331659. The third author (Pavlov) was also supported the Evergrow project of the EU and part of the work was done while on a visit to the Exystence Institute.

Keywords

Auctions
Mechanism Design
Spatially Distributed Market

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10.1145/988772.988776

Cite this

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N2 - We consider the problem of a spatially distributed market with strategic agents. In this problem a single good is traded in a set of independent markets, where shipment between markets is possible but incurs a cost. The problem has previously been studied in the non-strategic case, in which it can be analyzed and solved as a min-cost-flow problem. We consider the case where buyers and sellers are strategic. Our first result gives a double characterization of the VCG prices, first as distances in a certain residue graph and second as the minimal (for buyers) and maximal (for sellers) equilibrium prices. This provides a computationally efficient, individually rational and incentive compatible welfare maximizing mechanism. This mechanism is, necessarily, not budget balanced and we provide also a budget-balanced mechanism (which is also computationally efficient, incentive compatible, and individually rational) that achieves high welfare. Some of our results extend to the cases where buyers and sellers have arbitrary convex demand and supply functions and to the case where transportation is controlled by strategic agents as well.

AB - We consider the problem of a spatially distributed market with strategic agents. In this problem a single good is traded in a set of independent markets, where shipment between markets is possible but incurs a cost. The problem has previously been studied in the non-strategic case, in which it can be analyzed and solved as a min-cost-flow problem. We consider the case where buyers and sellers are strategic. Our first result gives a double characterization of the VCG prices, first as distances in a certain residue graph and second as the minimal (for buyers) and maximal (for sellers) equilibrium prices. This provides a computationally efficient, individually rational and incentive compatible welfare maximizing mechanism. This mechanism is, necessarily, not budget balanced and we provide also a budget-balanced mechanism (which is also computationally efficient, incentive compatible, and individually rational) that achieves high welfare. Some of our results extend to the cases where buyers and sellers have arbitrary convex demand and supply functions and to the case where transportation is controlled by strategic agents as well.

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KW - Spatially Distributed Market

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Mechanisms for a spatially distributed market

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Keywords

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